The impact of technical barriers to trade on export margins : Evidence from Egypt{u2019}s Firm-level data / Yasmine Kamal Mohamed ; Supervised Chahir Zaki

Thesis (Ph.D.) - Cairo University - Faculty of Economics and Political Science - Department of Economics

The study shows that Technical Barriers to Trade (TBTs) are the mostly adopted non-tariff measure. They on average affect about 30% of products and trade values according to frequency indices and coverage ratios. Meanwhile, TBTs are the most problematic NTM as indicated by business surveys in developing countries. They could increase both fixed and variable export costs of firms, negatively affecting their intensive and extensive export margins. The study contributes to the scarce empirical evidence on the impact of technical measures on exports at the firm-level. It uses firm-level data for Egypt and combines it with TBT specific trade concerns database of the WTO over the period (2005-2011). It employs a variant of a gravity model with high-dimensional fixed effects. Results indicate an insignificant effect of TBTs on firms{u2019} intensive margin. On the other hand, the extensive margin and entry probability are negatively affected by TBTs, while exit probability is positively affected. Accordingly, TBTs mainly represent an increase in fixed costs of exporting. Importantly, smaller firms are more adversely affected by TBTs in their export participation and entry and exit decisions. The effect of TBTs on firms{u2019} product diversification is found to be sector-dependent; positive for agricultural sectors and mixed for non-agricultural ones. Firms are generally found to increase their market diversification in response to TBTs. This is especially true for large firms within their set of African and Asian destination markets. By contrast, there are less prospects of firms{u2019} diversification into less stringent destinations within the European region. Export strategies should therefore consider the higher adverse effects of TBTs on entry and exit of smaller-sized firms. This implies their provision of special support in the form of quality-related training services, technical assistance programs on standards compliance and certification, and greater financial assistance

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